The stock market ended flat on Tuesday after traversing a bumpy pathway, driven by the uncertainty -- and then the certainty -- of President Trump's announcement regarding the Iran nuclear deal.
The world now knows that the U.S. is pulling out of that deal and will be reinstating "the highest level of economic sanctions" on Iran with the provision that companies doing business with Iran will have 90 days, and in some cases 180 days, to wind down those operations, lest they leave themselves in a position to suffer sanctions as well.
Companies starting new business with Iran in the wake of the president's announcement would be subject to sanctions immediately.
The decision to pull out of the deal has caused a stir around the globe, but thus far, it hasn't disrupted the stock market.
The S&P futures are up nine points and are trading 0.3% above fair value. The Nasdaq 100 futures are up 17 points and the Dow Jones Industrial Average futures are up 95 points.
Today, then, isn't going to start on a flat note. It will start on a higher note, with energy stocks and financial stocks presumably occupying a leadership position.
The expected strength in the energy sector is expected to flow from the strength in oil prices this morning. They are up 2.5% to $70.76 per barrel as traders are running with the concern that oil supply from Iran will be curtailed, as well as the idea that oil prices might be carrying a little more of a geopolitical risk premium than before.
The expected strength in the financial sector is expected to flow from the bump in market rates. The yield on the 10-yr note pushed to 3.01% overnight and is now up three basis points at 3.00%.
On a related note, there is a $25 billion 10-yr note auction today. Results are expected at 1:00 p.m. ET.
There hasn't been much reaction in the futures market, or the Treasury market, to the Producer Price Index (PPI) report for April.
The final demand index was up 0.1% (Briefing.com consensus +0.2%) while the final demand index, less food and energy, was up 0.2%, as expected.
Those monthly readings left the final demand index up 2.6% year-over-year, versus 3.0% in March, and the final demand index, less food and energy, up 2.3%, versus 2.7% in March.
The key takeaway from the report is that there was a moderation in the producer price inflation trend in April, yet it wasn't significant enough to alter the Federal Reserve's perspective pertaining to the presumed path for inflation and monetary policy.
The Consumer Price Index for April will be released on Thursday.
In other developments, Walt Disney (DIS) posted better than expected earnings after Tuesday's close, yet lingering concern about the ESPN business and the fate of the company's deal to acquire the entertainment assets of 21st Century Fox (FOXA) have seemingly tempered investors' enthusiasm for the earnings news. Shares of DIS are down 0.3%.
Walmart (WMT), meanwhile, confirmed that it will pay ~$16 billion for an approximately 77% stake in Flipkart Group. The retailer anticipates the transaction having an approximately $0.25-$0.30 per share negative impact on FY19 EPS, assuming the deal closes at the end of the second quarter of this fiscal year.
Shares of WMT are down modestly in pre-market action, which is geared more toward the move in oil prices and interest rates.